I know there are Garmin watches that require a passcode after they are off the wrist but until now the SQ2 hasn't been one of them.
Yesterday, after I took my SQ2 off to charge I started seeing the red banner about an incorrect passcode.
This is not the Garmin Pay Passcode, I believe.
I'm guessing that that feature is about to be implemented on the SQ2 but the firmware does not support it (yet) or it's a bug.